Aussie Dollar And Bond Yields Rise On Unchanged RBA

May 07 19, 07:08 GMT

General Trend:

Shanghai Composite rises less than 1.5% in early trade after over 5.5% decline during Monday’s session
Trade-sensitive Shanghai Telecom Services index rises over 1% after dropping more than 9% on Monday
Nikkei 225 declines upon return from Golden Week holiday, price action driven by catchup effect and recent earnings
Iron ore futures rise as Vale mine resumption was blocked by court; Aussie iron ore miners gain
South Korea Kospi drops after return from holiday as markets assess recent news related to North Korea and US/China trade
On Monday US equities were resilient after Trump’s tariff threat, concerns were eased as China is still planning to visit the US for talks according to analysts (Nikkei)
Philippines CPI extends downward trend in April, central bank expected to meet on Thursday (consensus is for rate cut)
China Commerce Ministry remains quiet on trade talks with the US
China monthly FX reserves expected to be released later today
Fast Retailing due to report monthly sales after Nikkei close
RBNZ due to hold policy meeting tomorrow (consensus is for 25bps rate cut)
Toyota Motor expected to report results on Wednesday

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened +0.2%
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50%; NOT EXPECTED, updates CPI and GDP outlooks
(AU) AUSTRALIA MAR RETAIL SALES M/M: 0.3% V 0.2%E; Q1 Retail Sales Ex-Inflation Q/Q -0.1% V 0.3%E
(AU) Australia Mar Trade Balance (A$): 4.95B v 4.5Be; Exports M/M: -2.0% v 0% prior; Imports M/M: -1.0% v -1.0% prior
(NZ) Reserve Bank of New Zealand (RBNZ) Q2 Inflation Expectation Survey: 1-year: 1.9% v 1.8% prior; 2-year: 2.0% v 2.0% prior
GNC.AU Long-Term Asset Partners withdraws A$10.42/share A$3.3B offer for company
AGI.AU Guides H2 Pretax A$4M, weaker performance (prior saw improved performance), results impacted by intense competitive market pressures and delays to new product approvals

Japan

Nikkei 225 opened -0.3%
(JP) JAPAN APR FINAL PMI MANUFACTURING 50.2 V 49.5 PRELIM (first expansion in 3 months)
6752.JP Targeting by 2021 to have Rev in newly created China and Northeast Asia segment of ¥1.0T, +40% from 2018 levels – Nikkei
9984.JP Said to be considering listing its Vision Fund – Japan press
(JP) Japan Economy Min Motegi: Some output sectors showing weakness from China slowing; reiterates wants to agree to trade package with US

Korea

Kospi opened -1.1%
(US) Pres Trump tweets: “Just spoke to Prime Minister Abe of Japan concerning North Korea and Trade. Very good conversation!”
(KR) Bank of Korea (BOK) Gov Lee: Monitoring global financial markets, will act to stabilize markets if needed; no need to overact on uncertainties over US/China trade talks
(KR) South Korea Fin Min Hong: Policy focus is on curbing downside risks to markets from North Korea and US-China trade talks; Wll make swift policy response should market volatilities widen
017670.KR Reports Q1 (KRW) Net 379.2B v 381.2Be; Op 322.1B v 325.5B y/y; Rev 4.34T v 4.18T y/y
(KR) South Korea sells KRW850B v KRW850B indicated in 3-yr Govt bonds, avg yield 1.705%, bid to cover 3.22x

China/Hong Kong

Hang Seng opened +0.4%; Shanghai Composite opened +0.3%
(US) Trade Rep Lighthizer: confirms US will raise China tariffs effective 12:01ET on Friday if no deal; confirms China was reneging on commitments; We’ve had no contact with China’s Liu in 24 hours; have seen ‘erosion in commitments’ in last week; does not know why China position shifted – comments to reporters
(CN) China Foreign Ministry spokesperson Geng Shuang: Hopes US can meet China halfway on trade talks; Chinese team preparing to travel to US this week; declines to answer on trade talks timing; Delegation still preparing for US trip (yesterday after the close)
(CN) Analysts speculate that China PBOC and the Govt may increase pace and size of its stimulus to boost consumption amid increased trade tensions – SCMP
(CN) China PBoC Open Market Operation (OMO): Injects CNY20B in 7-day Reverse Repos v CNY20B prior; Net injects CNY20B v CNY20B prior
(CN) China PBoC sets yuan reference rate: 6.7614 v 6.7344 prior (weakest fix since Feb 19th)
(CN) Global Times Op Ed: China is ready for temporary breakdown in trade talks
(CN) Some analysts expect China auto industry to be supported by used car exports, notes start of China’s program to export used vehicles – China Daily

Other Asia

(PH) Philippines Apr CPI M/M: 0.3% v 0.1% prior; Y/Y: 3.0% v 3.1%e
2354.TW Chairman Gou: Would shut down factories in China and move them elsewhere if China threatens the company’s manufacturing facilities there if he is elected Taiwanese president; reshaping supply chain for US, will move some manufacturing facilities to US

North America

APC Board Determines Revised Proposal From Occidental Constitutes A “Superior Proposal” to Chevron’s proposal
(US) Fed’s Kaplan (dove, non-voter): Not yet inclined to lower rates to deal with inflation; no bias to next rate move being up or down, Trade uncertainty is impacting supply chains, Trade uncertainty has not yet had material impact on GDP
VALE Brucutu mine resumption has been stopped by new court decision; Guides FY19 iron ore and pellets sales at mid to low end of guidance of 307-332M tons
(MX) US to impose 17.5% tariff on tomatos from Mexico

Europe

(UK) EU’s Barnier: EU is willing to revise Brexit blueprint on future EU/UK ties

Levels as of 1:20 ET

Nikkei 225, -1.7%, ASX 200 +0.2%, Hang Seng -0.1%; Shanghai Composite -0.4%; Kospi -1.9%
Equity Futures: S&P500 -0.6%; Nasdaq100 -0.7%, Dax -0.5%; FTSE100 -0.3%
EUR 1.1214-1.1189 ; JPY 110.85-110.58 ; AUD 0.7048-0.6947 ;NZD 0.6631-0.6595
Gold +0.1% at $1,284/oz; Crude Oil +0.3% at $62.45/brl; Copper +0.2% at $2.835/lb